Monday, 12 July 2010

Mayoral hopeful Simon Prast is right. Prohibition doesn’t work. If no government, however officious, can even keep drugs out of its prisons, then it's clear enough that drugs aren't just going to disappear from the streets no matter how many laws are passed--any more than alcohol disappeared when laws were passed prohibiting that. All prohibition does is raise the crime rate, criminalise consumers, corrupt the cops, and put profits and quality control in the hands of gangs.

But don’t ask “What sane person would want to do that?” because prohibition is not about sanity. Says the UK Royal Society for the Encouragement of Arts, Manufactures and Commerce, "Drug laws are driven by ‘moral panic’… Whether we like it or not, drugs are and will remain a fact of life.”

Demonising drugs does more harm than good… The use of illegal drugs is by no means always harmful any more than alcohol use is always harmful," Professor Anthony King of Essex University, the commission chairman told Britain's Daily Telegraph. Professor King added: "The evidence suggests that a majority of people who use drugs are able to use them without harming themselves or others... The harmless use of illegal drugs is thus possible, indeed common."

It’s didn’t worked for alcohol—banning alcohol in the US was history’s biggest boon for organised crime.

It hasn’t worked for cannabis—banning cannabis in NZ has been the biggest shot in the arm for gangs you could imagine.

Obtaining methamphetamine may be getting easier despite a Government crack down on the drug, a report says.

These are probably some of the reasons so many former law enforcement officers have joined the international advocacy group, Law Enforcement Against Prohibition (LEAP) (wouldn’t it be great to hear Leighton interviewing one them on air?), which argues that prohibition only exacerbates the harms it purports to diminish…

LEAP Statement of PrinciplesLEAP does not promote the use of drugs and is deeply concerned about the extent of drug abuse worldwide. LEAP is also deeply concerned with the destructive impact of violent drug gangs and cartels everywhere in the world. Neither problem is remedied by the current policy of drug prohibition. Indeed, drug abuse and gang violence flourish in a drug prohibition environment, just as they did during alcohol prohibition. To view LEAP's Statement of Principles in its entirety, please click here.

But why on earth is Simon Prast talking only about legalising ‘P’? Yes, that’s a War that is already lost. But the best way to get rid of ‘P’ would be to get rid of prohibition across the board. Or even begin formulating a serious transitional plan to start the process. Why do I say that to get rid of ‘P’ we need to get rid of prohibition altogether? Because, as Milton Friedman pointed out with his Iron Law of Prohibition, it’s the particularly virulent drugs like ‘P’ that prohibition actually encourages. Johann Hari summarises:

‘You are not mistaken in believing that drugs are a scourge that is devastating our society [said Friedman]. Your mistake is failing to recognize that the very measures you favour are a major source of the evils you deplore.’ Friedman proved, for example, that prohibition changes the way people use drugs, making many people use stronger, more dangerous variants than they would in a legal market. During alcohol prohibition, moonshine eclipsed beer; during drug prohibition, crack is eclipsing coke. He called his rule explaining this curious historical fact “the Iron Law of Prohibition”: the harder the police crack down on a substance, the more concentrated the substance will become. Why? If you run a bootleg bar in Prohibition-era Chicago and you are going to make a gallon of alcoholic drink, you could make a gallon of beer, which one person can drink and constitutes one sale – or you can make a gallon of pucheen, which is so strong it takes thirty people to drink it and constitutes thirty sales. Prohibition encourages you produce and provide the stronger, more harmful drink. If you are a drug dealer in Hackney, you can use the kilo of cocaine you own to sell to casual coke users who will snort it and come back a month later – or you can microwave it into crack, which is far more addictive, and you will have your customer coming back for more in a few hours. “Prohibition encourages you to produce and provide the more harmful drug. “For Friedman, the solution was stark: take drugs back from criminals and hand them to doctors, pharmacists, and off-licenses. Legalize. Chronic drug use will be a problem whatever we do, but adding a vast layer of criminality, making the drugs more toxic, and squandering £20bn on enforcing prohibition that could be spent on prescription and rehab, only exacerbates the problem. ‘Drugs are a tragedy for addicts,’ he said. “But criminalizing their use converts that tragedy into a disaster for society, for users and non-users alike.’”

He’s still right. And so is Prast.

So forget the ‘moral panic,’ and think instead of the immorality of telling others what they’re allowed to do to themselves. And consider: If it is impossible to ban drugs and iniquitous to try, then the only relevant question becomes: should we have a legal, transparent, accountable market for drugs, or an illegal, secretive, unaccountable one?

Your call.

* * * *

*No, I never thought I’d be writing a sentence like “mayoral hopeful X is right.” But there you go. Well done Mr Prast.

PS: For those not familiar with Uncle Milt’s ‘Iron Law,’ here’s a handy summary:

I'm of the mind that if women head out on the town with the purpose of being shagged by a sportsman, then they must bear some responsibility for their actions. Treating all women as victims infantilises them. If women want sexual freedom, they must accept sexual responsibility. Alcoholic comas, unwanted sex and remorse are occupational hazards for trollops on the prowl.”

There are people who are really just there for a screw. They are the team bike. And that's really distasteful to me ... The players are just going to laugh at them the next day. They find them a nuisance. I think those people are in it not because they enjoy the game, but because they want to have sex with a football player."

Oops, no that wasn’t him either. That was a 22-year-old who “confesses to being a former football groupie but believes she has now moved into the inner sanctum of a Sydney-based club. ‘It's not about me wanting to sleep with them and kiss them any more, it's about me enjoying their company,’ says Jane (not her real name).” So what did Haden say that was so out of turn? Here it is—no fooling this time:

There's a bloke called Hugh Grant. He got into a bit of trouble like this and I think if the cheque bounces sometimes, they only realise that they've been raped, you know, sometimes," he said. Haden said there were two sides to every story. ‘It's an equal society now, some of these girls are targeting rugby players and they do so at their peril today, I think.’"

So, um, anyone care to tell me which part of that is incorrect? Anyone? So if it’s not wrong, then what was so wrong in saying it? Nothing, says Lindsay Perigo, who reckons Haden is one of the few honest and courageous men in NZ public life:

Andy Haden's resignation as Ambassador for the Government's Rugby World Cup programme marks him out yet again as one of the very, very small number of people in New Zealand public life with integrity and courage… Mr. Haden is a hero. Lesser men—most men in New Zealand—would have gone on television, wept, apologised, begged forgiveness from all the people he supposedly had let down—and pleaded to be given another chance. Mr. Haden instead removed himself with great dignity from a situation where he would continue to be harassed by quacking dimwits masquerading as television reporters for the sin of speaking his mind, and reprimanded by moral pygmies like Murray McCully for the same reason. ”It is to be hoped Sky TV will not now lose its nerve as it did over the Murray Mexted affair, and will keep Andy Haden on as a fearless and robust commentator in a nation sadly lacking in fearless commentary in all fields.”

Not much to disagree with there, is there. So does sacking him change the truth? Or simply diminish debate.

UPDATE:

Make Paul The Octopus Rugby Ambassador, says Libz leader Dr Richard McGrath Libertarianz leader Richard McGrath today nominated the German octopus known as Paul as replacement for ex-All Black Andy Haden, whose utterances could not be kept under tight government control. "Paul is the sort of useful idiot Lenin would have loved," said Dr McGrath. "A spineless creature of subhuman intelligence who can only choose between options selected for him by his masters. Ideal fodder for the political ends of John Key and Murray McCully." "Andy Haden could not be relied on to stick to the script laid out for him by the National government who, as their name suggests, have nationalised the Rugby World Cup and would not hesitate to nationalise the rowing team ahead of the upcoming world championships. Their Labour predecessors were no better, forcing tax victims into funding local millionaires to compete in America's Cup yachting." "Unfortunately, John and Murray weren't prepared for the prospect of one of their appointees having a mind of his own and not being afraid to speak it," added Dr McGrath. "The 'psychic' octopus would be a much better choice, incapable of saying anything remotely controversial." "They could put his aquarium in one of those ugly sheds on the Auckland waterfront. Heaven knows no person in their right mind would want to party inside one of those architectural eyesores."

Here’s one of those popular dinner party conversations that cam up again over the weekend.

What place and period in history would you pick as being the best in history in which you might get a large number of your heroes around a dinner party table?

Maybe Athens in the Age of Pericles? Or Florence in the Renaissance? Edinburgh in the Age of Enlightenment? Philadelphia in the Agee of Revolution? Or maybe Paris, in the Age of Romanticism?

For my part, I reckon the best time to put together a sparkling, sparky dinner party full of talented people from every field that you’d really want to meet, you’d be hard pressed to go past New York in the 1950s. Just image the sort of talent you could put around the table from the folk who frequented Manhattan:

Frank Lloyd Wright

Maria Montessori

Arturo Toscanini

Ayn Rand

Pier Luigi Nervi

Duke Ellington

Albert Einstein

Terence Rattigan

Ludwig von Mises

Maria Callas

Joseph Campbell

Norman Borlaug

Fritz Lang

That’s a big table already, but there’d be some cracking conversations! For such a gathering, it’d be an honour just to help pour the gravy.

Friday, 9 July 2010

As the oil still spills and the Taleban remain undefeated, the news slowly dawns around the world that economic recovery will not be achieved simply by stiff doses of confident talk and stimulus packages,in New Zealand however we’re talking about two sheds. And Andy Haden. Which in many ways sums up New Zealand. On with this week’s ramble then, which will cast its eyes a little further. But first, those sheds…

…on which the two best comments comes from master speech-writer David Slack: ”Mr Key, Mr McCully. Embarrassing to see you couldn’t organise one on a wharf. Might still look OK if you can manage one in a brewery.” And: ”About this ‘evil genius’ reputation McCully enjoys. Is it a part of the trick that we cannot see it?”

In NZ, we’ve seen it all before. If Australian PM Julia Gillard is just Helen Clark with sex appeal, then is US Supreme Court nominee Elena Kagan just Margaret Wilson with both legs? Elena Kagan and Margaret Wilson – STEPHEN FRANKS

Mark Hubbard is getting that “head for the hills” feeling. ”With the heavy handedness of this NZ government: the destruction of the reputation of Allan Hubbard …); with the abolition of a widely used business structure … at the stroke of a pen; with Peter the Persecutor Dunne bragging at how he has got so much money from the taxpayer to persecute the taxpayer with; the ETS foisted on us; increases in GST; increases in ACC; even the cynical move of the Double Dipper from Dipton announcing a 28% corporate tax rate, in the knowledge that from the tax law created from Case W33 through to Penny and Hooper, the IRD will take most companies trying to actually use this tax rate for anti-avoidance - with all this, I have been viewing Aunty Helen and Papa Michael with some nostalgia…” Heresy? Or reality. Very, very good Linz. I've… – Mark Hubbard, SOLO

I love it when economists say that “[economic'] forecasters are off with the fairies.” Rodney Dickens reckons the predictions of “the Reserve Bank and the 10 forecasters surveyed by NZIER in June … predicting robust economic growth over the next two years and robust growth in residential building activity … are dubious.” I’d say he’s being too kind. A rift between housing market and economic growth prospects[pdf]– RODNEY’S RAVINGS

“[America’s] fiscal position has deteriorated appreciably since the onset of the financial crisis and the recession.” The origin of that observation: Chairman of of the US Fed, Ben Bernanke. But he’s still missing something, says Money Morning Australia, “No mention, of course, of the crucial role of the Federal Reserve, which was to create the money to create the boom, which created the bust, and now to create the money to bail everybody out so that we, as a nation, would have time to leisurely wait for some miracle to happen, sort of like at the end of old Grecian dramas where the plot has become so impossibly and hopelessly tangled up that the only solution was to resort to a deus ex machina …” Government and Economy Decline In Tandem – MONEY MORNING AUSTRALIA

“The current fiscal and monetary crisis in Europe should be viewed as an opportunity to reverse course -- to do away with the Euro, and return to national currencies in a setting in which the citizens of all the European countries would have the freedom to choose and use which ever currency in which they have the most confidence.”Competitive Currencies Instead of the Euro Monopoly – Richard Ebeling, IN DEFENSE OF CAPITALISM

He’s not entirely versed in sound economics, and I suspect CNN secretly just likes the Princeton vs Harvard schtick, but historian Niall Ferguson once again does his best to tear down Paul Krugman’s vainglorious “let’s print money” solution to economic depression.

Meanwhile, George Soros plans to invest $200m to oust “free market economics” from academia. (Free market economics? In academia!? But where would he find it?) Converting the Preachers – NEWSWEEK

And look! Here’s an “amusing 1933 propaganda film trumpeting government inflation as the cure for depression and hailing FDR as a great visionary. Yousa, yousa, happy days are here again!" "And Then Kiddies, We'll All Have Noodles in our Soup" – Doug Reich, THE RATIONAL CAPITALIST

Arizona's "Papers, please" anti-immigrant law is showing signs of unintended consequences even before it goes into effect. "We are getting to see more empty houses as the Mexican population is starting to leave. Not all of course, but quite a lot. I see it here in Surprise," says agent Sylvia Rivera. Unexpected Economic Consequences in Arizona's Immigration Law – PBS NEWS HOUR

John Stossell takes on Parasitic Tort Lawyers. And yes, there does appear to be a redundant word in that last sentence. Parasitic Tort Lawyers - John Stossell, TOWN HALL

What is the real lesson and future for the tea party movement? And how large an impact will they have on the upcoming elections? The guy who kicked off the tea party movement with an onscreen rant against bailouts, Rick Santelli, is asked to opine.

Iraq is "reverting to its former freedom-less ways", according to Stanford University professor Joel Brinckley. Is this the failure of democracy, wonders Mike "Zemack" LaFerrara, or democracy in action? Iraqi Democracy vs. Freedom - Mike "Zemack" LaFerrara, PRINCIPLED PERSPECTIVES

Here’s something for the monarchists. Christopher Hitchens on Prince Charles. “This is what you get when you found a political system on the family values of Henry VIII… This is what you get when you found a political system on the family values of Henry VIII.” Charles, Prince of Piffle: A very silly man gives a very sinister speech – Christopher Hitchens, SLATE

The three words that sum up courageous resistance to Islam are Ayaan Hirsi Ali, the brave and always articulate opponent of Islam’s culture of cruelty. In this wide-ranging interview she talks of western reaction to honour killings and other culturally-based religio-barbarism, saying it’s not enough just to condemn the repeated acts of cruelty, especially against women, but also important to recognise its source—the source the perpetrators themselves cite. Which is Islam. And I love her comments on the way people use the left-right divide as a way to refuse to listen.

Which seems like a good time to show you some of what you’ve been missing if you weren’t at OCON, the Objectivism conference currently being held in Las Vegas, or reading #OCON, the Twitter tag taking comments and updates from the conference. So here’s a brief selection of “tweets” slightly cleaned up—not quotes exactly, but the briefest of tantalising glimpses into the week-long conference:

US Founding Father saw their tax rates raising from 2% to 3-4%... and they considered *that* slavery– Brad Thompson

Foreign policy is always an expression of domestic policy – John Lewis

The vault of the Vatican is as bankrupt as the church itself. – Eric Daniels

A crucial error close to the root of Marx's economic theory is his not understanding marginal utility. – Eric Daniels

Daniels on marginal utility: Would you like a beer? How about 2? How about a keg? 60 kegs? 60,000 kegs

Modern economists like to differentiate between “positive” and normative economics; they prefer “positive” economics, i.e., “value-free” economics, because its just a whole bunch of mathematics. But the reality is that normative economics addresses the real arguments, centered around the morality,i.e., the value, of particular behaviours. – Eric Daniels

The Egalitarian view on luck : no one is fully in control therefore no one deserves anything. – Diana Hsieh

Going forward any PhD candidate at George Mason university in Economics will have to read Atlas Shrugged & OPAR – John Allison

If we're serious about changing the culture...there is only one example in modern history: Kant - John Allison

Rand is the powerful philosopher with the right ideas (a non-trivial competitive advantage). - John Allison

Patent infringement is an indirect use of force; just like fraud and libel - I'm obtaining from you, without your consent, your property. – Adam Mossoff

Not enforcing a patent is allowing someone else to take your intellectual property though indirect force. – Adam Mossoff

Scarcity is an invalid concept on which to base property rights; value is the proper concept. – Adam Mossoff

Patents protect the material reproduction of an idea, because that is where the value is actually realized. – Adam Mossoff

Software patents are very new ... they weren't permitted until 1981... they are legitimate and valid. They recognize that the value of software is in the product (what is produced by the code, not the code itself). – Adam Mossoff

"The patent system added the fuel of interest to the fire of genius." Abraham Lincoln

“John Allison only wears digital watches because he never wants to be a second hander” - AbsoluteKeenan

Man's environment has has never been better. Ever, ever, ever. – Yaron Brook

The role of technology is increasing the conversation. I bet someone is tweeting this right now – Yaron Brook [heh, heh]

"My licence plate reads: DIM WIT 1" – Leonard Peikoff

When Christian Religionists first heard about Aristotle in the 13th century they were astounded and horrified, it overthrew everything they believed. – Leonard Peikoff

Christian Religion first created Totalitarianism. Modern totalitarians stole even the small details from the Christians. I have to say emphatically and without any trace of hyperbole: Christianity invented Totalitarianism. – Leonard Peikoff

Conceptual shrinkage is inherent with a disintegrated mode of thinking. One comes to despise ideology altogether because an ideology is an abstract system, and the disintegrated thinker cant function there. -Peikoff

The more you cut back on the integrating concepts, the less help the remaining concepts are to you. Ultimate result is a scorn for concepts. – Leonard Peikoff

A college education today leads to a student’s (conceptual) shrinkage. – Leonard Peikoff

David Harriman's new book 'The Logical Leap' explores what happens to the physics when philosophers abandon reason.

"Both the rationalist and skeptic are trapped inside their heads, and they can't find the way out to the real world" - David Harriman

Methods of difference and agreement are the basic methods by which we identify causal relationships, and we use them continuously.– David Harriman

Today physics is lost. There has been no progress in physics in a generation. The problem is epistemological. – David Harriman

The Hypothetical Deduction account of science basically states that scientists just guess and hope they're right. – David Harriman

[By contrast] the inductive approach to the acquisition of scientific knowledge has the simple solution to all the problems facing science education.– David Harriman A random presentation of facts is not an education.– David Harriman

The way science is taught today teaches children to blindly accept floating abstractions, instead of thinking for themselves. – David Harriman

An intimate connection between mathematics and physical science is one of the key things missing in K-12 education today– David Harriman

Harriman says students with a full science education from his Falling Apple Science Institute would laugh if presented with global warming theory… (Falling Apple is a non profit working to revolutionize science education, created by Tom VanDamme and David Harriman).

“The right to private property was one of the central issues involved in the American Revolution. The colonists’ cries of “taxation without representation” were but protests of what they saw as an unjust taking of private property.” Independence and the Right to Private Property – Joseph, C. Phillips, BIG HOLLOYWOOD

Hayek’s Road to Serfdom is doing an Atlas Shrugged. After it shot to number one on Amazon’s lists, it’s now still hovering in the top ten. And you can buy an original Australian first edition on TradeMe—bidding is currently a snip, at $499. (Bidding closes on Sunday.) THE ROAD TO SERFDOM. 1st Australian edition 1944 – TRADE ME

Eric Crampton highlights two ways of looking at Hayek’s Road to Serfdom. Was he talking about the inevitability of serfdom attendant on central planning, or the incompatibility of central planning and freedom?Stopping points on the Road to Serfdom – OFFSETTING BEHAVIOUR

Here’s a new book on my favourite conspiracy theory, written by a chap who was (in his first life) main counsel for the Republican minority on the Joint Congressional Committee that investigated Pearl Harbor from 1945 to 1946, and who became a close confidant of Ludwig Von Mises. “Published for the first time in 2010, it blows the top off a 70-year cover-up,” say the publicists, “reporting for the first time on long-suppressed interviews, documents, and corroborated evidence.” I certainly intend to test out its claims. Pearl Harbor: The Seeds and Fruits of Infamy by Percy Greaves, Jr. – MISES STORE

Wondering what’s going on with that Russian spy story? Isn’t it great how comedy can sometimes illuminate an issue. Especially when the correspondents are as cutely illuminating as Olivia Munn. So, why is everybody so excited about a few Russian spies…? Because this is something we can understand.

The leitmotif of the Climategate emails was the eradication from the academic literature of the medieval warming period. Yet not one of the recent inquiries discussed that. Go figure. At least one inquiry into Climategate by a non-skeptic was not a total whitewash, however. The Pearce “Inquiry” – Steve McIntyre, CLIMATE AUDIT

Muir Russell says that they “have seen no evidence of any attempt to delete information in respect of a request already made”! You Can’t Be Serious! - TOM NELSON’S BLOG

“Those using human induced global warming for political and economic ends could not allow anyone to find there was something wrong with the data or the method. Instead they laugh in our faces with the most transparent, manipulated brazen cover up possible.” – Dr Tim Ball Climategate Investigations Are Arrogant Insults – Dr Tim Ball, CANADA FREE PRESS

“"In the run-up to Copenhagen, we often heard the phrase 'the science dictates' - that we need a 40% cut in rich-country emissions by 2020, for example - when in fact only a very specific, and politically loaded, interpretation of the science implied any such thing.” - Dr Myles Allen, head of the climate dynamics group at University of Oxford's Atmospheric, Oceanic and Planetary Physics Department US climate scientists receive hate mail barrage in wake of UEA scandal - GRAUNIAD

If you thought that climate alarmism would die out after the revelations of the ClimateGate enails, then those three whitewashed reports released after three circumscribed inquiries into the revelations of those emails should leave you in no doubt that the roots of climate alarmism are much deeper than that—and, as Keith Lockitch points out, will require philosophical fumigation to expunge. (To view the video, follow this link, then scroll down to find the title slide for Keith’s talk.)

About this time in a post, I always like to look at a picture of an elephant on waterskis. Well, doesn’t everyone?An elephant on waterskis – QUOTE UNQUOTE

Speaking of songs you can’t get out of your head, as someone was, this song sung by the The Who’s Keith Moon has been in mine for weeks—and I only heard it once! I warn you, whatever you do, not to touch it. It’s a virus, I tell you.

So as an emetic, here’s the first part of Ernest Bloch’s Concerto Grosso [hat tip T. Shoebotham]

And this? Well, this is probably just the finest piece of music ever written—the “Love Death” from Wagner’s Tristan & Isolde. And Waltraud Meier’s not bad either. (Psst: This Sunday, the Auckland Wagner Society are showing on the big screen at the Auckland Uni Music School, 6 Symonds St, a recent production of Tristan & Isolde. Come along and join us. Starts at 4:30pm, and it goes for hours. :-) )

I think it’s almost time for a beer. This week, I think it’ll be a Cooper’s Original Pale Ale, supplies of which are appearing in greater numbers all across this great land.Have yourself a great weekend,PC

What a stunning piece of art! Just who is pursuing whom, and for what? Perhaps the artist's explanation might help. . .

With a passion bordering on insane somnambulism I poured everything I had into pursuing the furthest reaches of my art. It was wild. I worked 16 hours a day for six months, somewhere I remember the crunch of ice outside under my shoes. I worked to integrate: the fantastic dramatic spotlight affect of Rembrandt; the wet-clothe technique of ancient Greek sculptures; the romantic themes of Delacroix; and the pure vibrant contrasting colors of the Impressionists (the painting has no black). I made more studies than I can remember. And it slowly took form. Once, for this piece, I went into Wall Street late at night to make a pastel color study of the granite wall of a skyscraper; got very curious looks from a patrol... Pursuit is the work I am most proud of.”

Thursday, 8 July 2010

You can’t create real cultural change through a lecture, or just through blogging. As philosopher Leonard Peikoff said yesterday, “You can only reach the culture through the educational system.”

So if you want to know about the onlyrational method of education, then listen up. Here’s your chance. Next week in Mt Eden there is an information afternoon at the Maria Montessori Education Foundation (MMEF) training centre that you can attend, and learn more.

This occasion will provide you with an opportunity to find out more about the forthcoming A.M.I. (Association Montessori Internationale) Early Childhood Teacher Education Course, to talk to A.M.I. Montessori teachers and other members of the Montessori community & learn about Montessori Education.

The afternoon is primarily for prospective students of the A.M.I. Montessori (3-6) Teacher Education Course to be held in Auckland in 2011-2013, or for those who know someone who they think would like to be a prospective student—or, really, for anyone who’d like to know more about Montessori education and get a hands-on feel for it. Which is everyone with a brain—or should be.

The people at MMEF are folk who love Montessori education and what it can do for young children, and they want you to love it too.

To find out more about the AMI 3-6 Course visit mmef.org.nz. To find out more about Montessori in New Zealand visit montessori.org.nz, or watch this brief introduction:

And finally, and on a lighter note … to find out more about what Montessori is not, then visit the new website of the Montessomething School, a website satirising schools that take the name Montessori but disregard the actual methodology. If you know anything at all about real Montessori schools, this will have you in stitches.

The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.

Notes the Casey Report,

Since January of 2008, the private sector has shed 7.9 million jobs, reflecting a decline of 6.8% in total private employment over the past 30 months, while the federal government has added 469,000 jobs, indicating an increase of 17.1% over the same period.”

Hardly needs further commentary, does it. For more words, however, about why the jobs have disappeared, head to the blog The Economic Collapse.

“Mr Key, Mr McCully. Embarrassing you couldn't organise one on wharf. Might still look OK if you can manage one in brewery.”

You have to laugh.

But think about this for a moment. Every three years you and your friends troop into the polling booth, and vote to give more power to politicians to plan your life. Maybe every time you do you should think about the circus politicians make about a simple piss-up. If the political process can’t plan that, why would you want it planning your life?

But maybe you think agree they can’t (and shouldn’t) plan your life, and shouldn’t be allowed to try—but you still think they’re the best ones to plan where so much of the country’s money is spent.

Well, quite apart from the morality of that notion (whose money?), hasn’t the revelations of their credit card spending rather exploded that notion for you as well?

So perhaps every time you find yourself thinking to yourself, “we” need to do this and “we” need to do that, just think instead of those two sheds on that windswept wharf and the stuff up they’ve already made trying to organise one down there … and think again.

Those people following me on Twitter might both be wondering what all the quoted, re-tweeted material is from something tagged #Ocon.

To save your confusion, or just because you’re wondering why the tweets sound more cogent that usual, I’m “re-tweeting” lectureupdates from the Objectivism conference (OCON) currently being held in Las Vegas. And people posting these updates have tagged them with #Ocon so those of us not in Las Vegas can follow them (these “hash tags” is how Twitter allows you to follow a particular subject.

The way some alleged economists talk about “demand” and how to boost it, you’d think that boosting demand was just a matter of wheeling out the printing press and machine-gunning retailers with paper money.

If only reality worked as well as their fantasies!

Sure, in all those Keynes-inspired textbooks boosting demand is all simply a matter of combined fiscal & monetary legerdemain, but as we discovered in the seventies after two decades of this kind of poncing about, the result of this sleight-of-hand is not a medium-term boost to demand, but stagnation, inflation and a long-term dilution of purchasing power of the currency in which the printed paper is denominated.

In reality, i.e., the place where we live and work, demand comes not from the printing press, but from production. The so-called “Classical Economists” understood this perfectly.

They understood that wishing for something doesn’t make it so. Demand, they said, is not just a pent-up desire; it is “the will combined with the power of purchasing.”

The will to purchase can be taken for granted [explains George Reisman]. All that is required to enlarge demand is the power of purchasing. And all that is required to enlarge the power of purchasing ... is an increase in production. In the words of David Ricardo, the desire to consume ‘is implanted in every man’s breast; nothing is required but the means, and nothing can afford the means but production.’”

It’s so simple, it’s no wonder Keynes tried to deny it. When I supply a bunch of stuff, and you offer to exchange it with me for something I value more (the very basis of trade), what I want for the goods I’ve supplied is not just coloured bits of paper but what those coloured bits of paper can buy. The printing of lots of coloured bits of paper does nothing at all to increase what I can buy, in reality all it does is dilute how much real stuff those bits of paper can command. The only way to produce more purchasing power is to produce more.

The Keynesian denial of this fundamental fact is not based at all on sound economics, but on the reification of consumer’s wishes as if they constituted the very power to create—on the fantasy of consumptionism “in which one not only can eat one’s cake and have it too, but in which one bakes one’s cake in the very act of eating it.”

But, in fact, consumers qua consumers are not part of anyone’s market; qua consumers, they are irrelevant to economics. Nature does not grant anyone an innate title of “consumer”; it is a title that has to be earned—by production. “Only producers constitute a market—only men who trade products or services for products or services. In the role of producers, they represent a market’s ‘supply’; in the role of consumers, they represent a market’s ‘demand.’ The law of supply and demand has an implicit subclause: that it involves the same people in both capacities. “When this subclause is forgotten, ignored or evaded—you get the economic situation of today...” [Ayn Rand, in ‘Egalitarianism and Inflation’ (1974)]

Demand is not just a pent-up desire; it is “the will combined with the power of purchasing.” In reality, it is something only producers can do.

This is part of a continuing series giving a common sense explanation of economic terms and concepts as used by sane economists. The series as it grows can be accessed through the Cue Card Economics tag.

Many entrepreneurs, inventors, and economists complain about the Patent System and intellectual property rights. However, when you examine their complaints they are often concerned about how the patent system is implemented as opposed to the concept of property rights for inventions – patents. For instance, an extremely successful entrepreneur and angel investor I know complained that patents increase the uncertainty when investing in a start-up company. Because of the long time that it takes patents to issue, he protested that it is difficult to know when a patent might suddenly issue, affecting the business plan of a start-up in which he has invested.

Other common complaints include that the patent system is expensive, is time consuming, and involves difficulties in determining the boundaries of a patent. Some people go so far as to suggest that this shows that patents are not a true property right at all—after all, they reason, it is easy to determine the boundaries of real property (i.e., land) and obtaining title to real property is a straightforward process.

Here, the complainers show that their ignorance of history. Before the advent of title insurance, buyers of land paid an attorney a lot of money to determine if they would receive “good title” if they bought it from the seller. This title opinion did not come with a guarantee and it was not cheap. In addition, you would have to pay a surveyor to determine the boundaries of your real property. The survey process was expensive and fraught with problems until the advent of modern technology, such as GPS. Our ancestors fought each other tooth and nail over the boundaries to their land. In fact, court battles over land are a great way to trace your ancestry, because these battles were so common.

While the critics are wrong in their comparison between real property and patents, they are correct that we need systems that reduce the cost and uncertainty of determining the boundaries of patents (inventions) and whether the owner has good title (102, 103 issues). In short, we need the equivalent of title insurance for patents. I believe that standards committees (e.g., IEEE 802.11 WiFi) are acting like title insurance companies. They determine which patents are essential to practice the invention. In effect, they determine the boundaries of patents with respect to the standard and to some extent determine if these patents have good title to an invention. I also believe that NPEs (Non-Practicing Entities) also act like title insurance companies. Of course, many of the critics of the patent system do not like NPEs either.

I, too, agree that the patent system takes too long to issue patents. However, the problem is not with the concept of a patent system but with a government that has failed to fully fund the Patent Office.

In the US, the Patent Office has always been funded by user fees, which are the fees that inventors pay to the Patent Office when they file for a patent. However, when an inventor writes a check to the Patent Office the money is deposited directly to the general treasury account of the federal government. Congress then appropriates these fees back to the Patent Office. In the last two decades, about one billion dollars in user fees have been diverted from the Patent Office to Congressional pet projects. When Congress diverts (steals) a billion dollars of user fees from the Patent Office, it is not surprising that the Patent Office will take longer to determine issues of patentability, increasing uncertainty for start-ups. If Congress itself was subject to their own Sarbanes Oxley Act, they would all be thrown in jail for this diversion of fees. In my opinion, the patent process has also become too formalistic and complicated.

These complaints that I have catalogued here are not complaints about patents per se, but complaints about the implementation of the patent system. I agree that the present patent system is overly cumbersome, too formalistic, too expensive, and takes too long. As an aside, I will point out that the critics of patents (IP) complain about their complexity but raise just a peep about a tax system that is over 10,000 pages and a new securities law that is over 1400 pages. There appears to be a disconnect in their thinking.

Some of the solutions to the problems with our patent system will occur if the free market is allowed to create solutions like title insurance for patents. Fully funding the Patent Office will solve many of the other problems, such as the lengthy pendency times. Patents are completely consistent with John Locke’s formulation of property. Patents like real property rights are fundamental to economic progress and human rights.

Wednesday, 7 July 2010

“God damn you if the only two words you can find to put together when talking about people who leave their homelands to seek a better life for themselves and their families are ‘illegal aliens.’”- James Kilbourne

What does an Australian Prime Minister do when she’s in desperate electoral straits? Bingo! She pulls out John Howard’s “attack the boat people” card—a “flood” of 1500 souls trying to “pour” into a country of 20 million—in an attempt to nullify the third of three pressing Australian electoral issues. Imperator Fish gets it right:

“You know it's election year in Australia when politicians over there start beating up on asylum seekers.”

And on this one she’s looking for John Key’s help. On that, I’m with the No Right Turn blog:

This is not an issue of Australia being “flooded” with hordes of refugees it can’t handle. The simple numbers themselves show that to be untrue. This is simply the way that Australia plays the race card—something it still unfortunately does too well.

And Key saying we’ve “got skin in the game” because “all of the intelligence advice that I have been getting as Prime Minister indicates we will be having boats coming to New Zealand”? Then Prime Minister, you need to be getting better intelligence. This is simply your own fantasy.

UPDATE 1: Quote added at the top.

UPDATE 2: In the comments, Dinther says, “The libertarian views on immigration I find difficult to accept…I would love to hear more how libertarians justify this stance.”

It sometimes seems there are more quack therapies for cancer treatments than there are cancer patients. Dr Shaun Holt, one of the good guys, talks to a talking head about his new book Complementary Therapies for Cancer that examines all the quackery, and discovers some useful complementary therapies.

The only comment I’d make is that the Bain murders are a rare example of a “binary” case, one in which the guilty party can only be one of either Party X or Party Y, and therefore proving the guilt or innocence of one has a reciprocal impact on the other.

Vanity Fair magazine asked 52 of the worlds “starchitects” (.e., folk who design expensive boxes that look good in magazines and treatises) to select the five most important buildings, bridges, or monuments constructed since 1980 and the greatest work of architecture thus far in the 21st century.

What they came up with instead was 132 pieces of starchitecture (i.e., expensive boxes that looks good in magazines and treatises), of which these are their top 22. [Hat tip Archinect]

Surprising news from the survey?Nothing at all by the best architect to to have emerged in recent years, Santiago Calatrava.

Tuesday, 6 July 2010

Obvious enough to anyone actually on the ground trying to do business, this news would be a surprise only to a mainstream economist, or to anyone who listens to one. Like NZIER’s Principal Economist Shamubeel Eaqub, for example, who is surprised to have to announce that, “The recovery may be stalling. The outlook is still fragile.”

No kidding.

But just imagine how all the mainstream economists must feel. Every economy in the world followed their advice and threw trillions of stimulus dollars against the wall, hoping that some of it would stick--and the result worldwide may be summarised in NZIER’s assessment of NZ’s last quarter: “The recovery may be stalling. The outlook is still fragile.”

So why are the mainstreamers (and those who take their advice) so surprised? Because, according to their lights, throwing out all those trillions to “increase aggregate demand” must have had some effect. And of course, they’re right, it did. It lit up some fireworks for a while, but at the cost of delaying any real recovery.

“The problems are not over [summarises Jim Rogers]. If you pump lots of money into an economy, it looks better but essentially it’s artificial. We are going to see more problems in the US over the next year or two.”

Nobel Prize winner and stimulus loon Paul Krugman reckons however that the problem is not too much stimulus, but too little. If we’re going to raise world demand properly, says this modern reincarnation of the Great Idiot Keynes, then Obama and The Fed (and, by extension, everyone else in the G-20 and beyond) needs to be thinking—not about austerity packages—but in terms of trillions of dollars more stimulus. If we’re going to successfully “raise demand,” then the world’s governments needs higher deficits, he says, not lower.

But what it won’t tell you is why he wants governments to be so irresponsible.

The answer to that, however, is very simple. At least, I’ll try to make it simple. The reason he wants to boost government spending is because he thinks that will boost demand; and by boosting demand he thinks we can all boost GDP. It’s a simple idea, but it’s wrong as hell. (“If you pump lots of money into an economy, it looks better but essentially it’s artificial.”)

Let me explain why.

Imagine a very simplified economy consisting of only you and your one-hundred closest friends. An economy based on beer. (I told you it would be simple.) Twenty of you grow the hops and barley. The next twenty brew it into beer. The next twenty package it and sell it. The next twenty are your partners, who like to stay home and drink. And the next twenty work for the government, and they like to use their parliamentary credit cards to buy your beer out of the mini-bar.

So there’s your basic economy. 80 people devoted to making and drinking beer, and 20 devoted to getting the hell in their way. (Oh, did I mention that the first sixty get the pleasure of paying the credit card bill for the annoying bastards consuming the mini-bar?)

Now in the way of conventional economics, the formula for GDP has been cunningly contrived to measure only what the drinkers do, and not what the other sixty get up to. Here’s the formula for GDP (which has here been given the title of ‘Baloney.’)

C is Consumption, i.e., all the drinking done by all your twenty drinking partners.

G is Government, i.e., all the drinking done by all the twenty grey ones from the mini-bar.

And I … now that’s “Investment.” And that’s a bit trickier, because it’s not total investment but only nett investment. Essentially this figure measures the difference between the six-packs of beer we sixty producers pay out to get things done, and the six-packs of beer we get back when we do things for others. So (to oversimplify a great deal) if our profit is ten percent, then only the work of six of us are measured in the GDP/Baloney figure.

If that sounds ridiculous, it’s because it is—yet that’s how ridiculous the GDP delusion is. It doesn’t measure production, it measures consumption. Rather than measure economic activity, what it does is bury the bulk of economic activity (i.e., the production of those other fifty-five folk) under this contrived figure of I, and then it contrives to ignore all fifty-five. (As a measure of just how much it ignores, US GDP in 2006 was $13.4 trillion, whereas total business spending was $31 trillion, meaning businesses were spending $4.30 for every $1 spent on personal consumption. Policy-makers take note.)

And it’s the homage paid to this ridiculous economic equation that allows him to get away with it, and is so economically destructive--as you’ll see when we take another look at our simplified economy in recovery mode.

Let’s imagine our simplified consumers have all just had a party. A big blow-out. A boom. And now it’s the morning after. (What a bust.) There’s still hops a’pickin’ and still beer a-brewin’ in the vats, but your packaging and production cycle has got a bit out of whack, and the livers of your drinking partners are all feeling a bit tender. Demand has gone down (and they’re starting to beg for the invention of some basic pain-killers), but in a short time production will be back on track and things ticking along again.

Then along comes Mr Krugman, and all he sees is calamity! “Look!” he cries. “Your “C” is way down. And your GDP/Baloney/Spending figure is flat! We’ve got to boost demand!” And of course, he’s right. It is. But it wouldn’t be right simply to print drinking vouchers so the twenty parliamentarians can raise “G” at the mini-bar, while ignoring the sixty producers who were trying to get things back on track, and whose production would have to pay for it (but whose total production has been “netted out,” i.e., minimised, in that figure for “I”.

Because their spending has to be paid for. That demand must come from production. And if you start “stimulating” the economy simply by overstocking the mini-bar, without ever getting anything back for it, then you’ll wake up one day soon and find you’ve got no more six-packs set aside to pay for more hops and more barley. Which means no more beer at all.

And just because that bogus GDP equation allows alleged economists like Paul Krugman to ignore that, it doesn’t mean that you should.

Because as the great economist Ludwig Von Mises used to say, it’s not just the next generation who pays for deficits, it’s this one. And the way we pay is by having our resources diverted today from all the good productive activity that the GDP equation ignores, into all the unproductive consumption that it picks up.

Which helps explain why the Paul Krugmans of this world (and their sophistic, simplistic equations) have helped make the recovery less likely, rather than more.

So to end this wee post, here’s economist Bob Murphy’s tribute to his favourite Keynesian moron, Paul Krugman (sung very badly to the tune of The Buckinghams’s Susan).

UPDATE 2: I’ve rewritten an old Q&A (from January ‘09) to help explain the point:

Stimulus: Because all economies have performance issues

Q:What is the point of running deficits? A: Because it’s demand that drives an economy, and we have to keep demand up to keep the economy going. So when consumer demand drops, the government has to pick up the slack. That’s it’s job.

Q: By borrowing?A: By borrowing, by printing money, by any way you can do it.

Q: But aren’t most business-to-business payments paid for out of real savings, not faked up demand? A: Well, yes…but we can try to fool them for a while.

Q: For how long? A: Long enough. Another three years if we need to.

Q: Until we turn into Greece?A: Um…

Q: So does borrowing or printing money bring any new resources into existence?A: Well, no. In the first case it transfers existing resources, and in the second it just dilutes existing savings. But it does create new demand.

Q: But doesn’t your demand have to be paid for with real resources? A: Well …

Q: So what you’re relying on is using your new bits of paper to redistribute existing resources in ways the original owners wouldn’t have otherwise agreed to.A: They need to spend!!

Q: And at the same time you’re denuding the existing pool of real savings. A: They need to stop saving and start spending!! We need to run deficits to make up for the money that savers have withdrawn from the economy by their hoarding.

Q: But how can you say savings are being hoarded when most business-to-business payments are paid for out of real savings? A: Well…

Q.Okay, let’s move on. What is an Economic Stimulus Payment?A. It is money the government distributes to some taxpayers to boost demand, and stimulate economic activity.

Q. Where will the government get this money? A. From taxpayers.

Q. So the government is giving me back my own money? A. Only a smidgen.

Q. What is the purpose of this payment? A. The plan is that you will use the money to purchase a High definition TV set or a new computer, thus stimulating the economy.

Q. But isn't that stimulating the economy of China? A. Um.

Q: Well, how on earth does it stimulate the one whose taxpayers are paying to be stimulated? A: It's all about the "multiplier."

Q: The "multiplier"? A: Yes, the "multiplier." Every dollar the government "injects" into the economy creates an even larger increase in national output -- a multipleup to one-and-a-half times the original spend-up. The money the government is giving away goes to retailers, which then goes to producers, which then goes to other producers and so on. The net result of the spend-up, as the theory goes, will be new jobs and an overall increase in the nation's income.

Q: So the government is giving me back a smidgen of my own money, and this smidgen is multiplied several times to create a "stimulus? A. You've got it.

Q: And it keeps prices up? A: We hope so.

Q: But don't the prices that producers pay need to fall in a recession to get real production going again? A: Well, yes.

Q: And it's not even backed by real demand, is it? A: Well, no.

Q: So how long can such an artificial stimulus last, then? A: Um, the theory is that it's only temporary at best.

Q: But you’ve been advocating running deficits and printing shopping subsidies to fix the economy now for nearly three years!A: They haven’t been over-spending enough!!

Q: Well, what sort of stimulus would it have created if you hadn’t taken it off me, abd I'd been able to keep that money myself, and either spend it or save it? A: Well . . .

Q: Or if producers had been able to keep their own money? A: Um . . .

Q: So it would be fair to argue that "not only does the increase in government outlays not raise overall output by a positive multiple; but, on the contrary, [it actually] leads to the weakening in the process of wealth generation in general.” A: But . . .

Q: And this is the whole theory? This is all you economists can come up with? A: Well, that's about it, yes.